I spend most of my time digging into Wall Street, hedge funds and private equity firms, looking for both the good and the bad. I also focus on the intersection of business and the law. I have worked at Forbes since 2000.

Wal-Mart Stores will likely face the wrath of the U.S. Department of Justice for reining in an internal investigation into bribery allegations at its Mexican subsidiary.

The New York Times reported in a blockbuster article this weekend that a former Wal-Mart de Mexico executive, Sergio Cicero Zapata, reported systematic bribery of Mexican government officials to top Wal-Mart officers in 2005, but that the company “hushed up” the allegations and chose not to report them promptly to federal prosecutors in the U.S.

According to the New York Times, the internal investigation into whether Wal-Mart’s Mexican division paid bribes to get permits that would allow the company to flood Mexico with new stores was handled by Jose Luis Rodriguezmacedo Rivera, the general counsel for Wal-Mart de Mexico. Rodriguezmacedo wrapped up the investigation quickly in 2006 and Wal-Mart did not report any potential anti-bribery law violations to the Justice Department till December 2011, after the New York Times alerted the company about its reporting into the Mexico allegations.

Whether or not Wal-Mart has violated the Foreign Corrupt Practices Act, the main U.S. anti-bribery law, is yet to be determined. But the company has most definitely violated the culture that the Justice Department has fostered in corporate America around the FCPA over the last decade. As a result, the Justice Department will be under tremendous pressure to demonstrate there are consequences for such behavior.

For many years the FCPA was a statute that was hardly enforced, but for a variety of reasons the Justice Department has vastly increased its enforcement of the FCPA in recent years. There have been at least 150 FCPA investigations by the feds in recent years, and companies have entered into many deferred prosecution or non-prosecution agreements, and even plea bargains, with the government that have included massive fines. After pleading guilty to FCPA violations, Siemens paid nearly $3 billion in fines and other associated costs.

During this unprecedented FCPA enforcement campaign, the Justice Department has promoted a custom in corporate America where companies are encouraged to self-report potential FCPA violations to the feds immediately upon learning about them in order to obtain leniency from the government. The companies almost always come to settlement agreements after they self-disclose.

Nevertheless, the fines and legal fees associated from these voluntarily disclosed investigations still often remain huge, causing many FCPA compliance experts and corporate executives to wonder about exactly what benefits are earned for telling the government about potential FCPA violations. Making things more complicated, the feds have lost cases and often failed to hold individuals accountable for FCPA violations that companies have already said were committed.

So the feds have a situation in which one of the nation’s biggest and most powerful companies, Wal-Mart, has allegedly rolled the dice and not self-reported allegations that were made. Now, those allegations are on the front page of the New York Times.

Worse still, the man who the New York Times describes as being “the driving force behind systematic bribery in Mexico,” Eduardo Castro-Wright, is now vice-chairman of Wal-Mart. He is retiring in July. H. Lee Scott Jr., Wal-Mart’s CEO in 2005, reportedly “rebuked internal investigators for being overly aggressive.” Mike Duke, Wal-Mart’s current chief executive, headed Wal-Mart International in 2005 and was “kept informed” about the internal investigation into the bribery allegations.

The problem for Wal-Mart is that if the Justice Department does not come down hard on it for not self-reporting, other companies, including those that did self-report and paid big fines, will understandably feel self-reporting is only for the foolish. Wal-Mart might have a good explanation for the government, but it has not been made public yet.

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walmart in trouble……for what widespread corruption hell its all corrupt ,POLITICIANS, CEOS ,POLICE ,I WILL SAY THAT THE MAJORITY ARE ALL MORAL REPROBATES PHUCKIING ANY AND ALL THAT ATTEMPT TO DERAIL THEIR PLANS……..GREEDY PIGS ARE ABOVE THE LAW THEY WILL GET THEIR HAND SLAPPED AND SOMEONE SOMEWHERE WILL CRACK AND THEY WILL BRIBE A JUDGE OR A POLITICIAN TO SEE THINGS THEIR WAY THEY WILL PAY HIM OFF AND SO GOES THE TALE NOTHING CHANGES

Thank you Nathan for the refresher course on international laws that only affect U.S. companies. If you list every company doing business with pay outs the list would be long very long. In the U.S. this is done under different language but its bribery all the same. The justice dept needs to investigate the Mexican government practices for doing big business in Mexico too, just not beat up on walmart. I have a short list of companies that I tried to do business with in Mexico but did not have the means to play by their rules. There is a culture in Mexico which is slowly dying off and being replaced by younger execs who see pay to play as the old way and the corrupt way of doing business.

The real story is the fact that Zapata probably did not get his fair share of the play money or got bullied out of some money. Zapata’s hands are just as guilty.

The FCPA does not affect only American companies. It also applies to the U.S. arms of foreign companies, to the extent they have direct dealings with other countries.

It is also not true the the U.S. is the only nation with laws making it a crime for companies to commit bribery, at home or abroad. Most developed nations have such laws.

What is true is that such laws are rarely enforced, because evidence is hard to obtain, and because corporations have better lawyers than the government does.

Now, however, the government has been handed a case on a virtual silver platter, with the defendant all but admitting its guilt. It has a chance to use the case to achieve what everyone wants, which is less bribery, through the only means to that end, which is prosecution of bribers, not bribe-takers.

The deterrent effect will be significant for a while if the government can win a conviction of one or more reasonably high-ranking Wal-mart executives. That would be a very good thing, indeed.

But at the same time, the leadership of WMT was publicly stating it was all about ethics, Castro-Wrong and crew knew with certainty that paying bribes was against WMT policy. My God, they fired people for accepting tickets to college football (Razorbacks). Petty tiny things were blown up. But if you are the poster child for international growth, you can do no wrong. The optometry division had doctors of optometry (not employees) billing Medicaid out the wazoo for glasses and exams, WMT knew and said it was not material. $24 mil is not material to WMT either, but they knew of bribes.

The whole lot of senior mgmt. needs to be fired, they are crooks and liars. That means you too Kelley Sears and Mike Spivey.

I guess if Wal-Mart is a Person then that person or persons can and should go to Jail. I cannot understand how publicly traded companies can keep millions of dollars off their financial balance sheets. This alone should get the Chief Financial Officer a few months in Jail. These are the people who are supposed to turn our economy around. These are the people who are supposed to get special tax treatment. These ARE the people who have over 70 percent part-time employees so those employees do not get any benefits. These ARE the people who do discriminate against women and minorities, but it isn’t a class action law suit. These ARE the people who raise store wide prices after they have removed all of their local competition in the hundreds of small towns across America. When you get right down to the truth, Wally World is no-one’s friend except their owners.

As long as we have a Supreme court that caters to large corporations and chooses to treat corporations as individuals, there will never be accountability. People will gamble to make themselves look good and it it doesn’t work out, they just walk away and the company pays. Individuals, in business, are essentially never held accountable. Maybe someone will be laid off, or get a slap on the wrist. However, once enough Innocent employees are laid off to compensate for the cost of the fines, and stock prices go back up, then it will be forgotten…

Funny how it’s illegal to bribe officials in other countries but you can “donate” as much as you want to officials in this country. If you have doubts that that constitutes bribery, just look at the laws that get enacted and the SCOTUS decisions that benefit the biggest donors (cf. Kelo vs City of New London).